Finance expert explains possible GOP tax plan setbacks

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RAPID CITY, S.D. -

The U.S. House and Senate’s new tax bills have drawn both criticism and praise from both ends of the political spectrum.

The Senate's proposed tax plan keeps the Alternative Minimum Tax, which is slated to rise $133 billion over the next 10 years.

The House's tax plan also repeals the Estate Tax, otherwise known as the death tax. Assets like real estate and stock which are passed on when a family member dies are all subject to the tax.

The Estate Tax contains a clause which increases the value of assets which are passed on, called Step-up in basis.

Rick Kahler, the president of the Kahler Financial Group, said new evaluations of Step-up in basis could hurt the middle class in South Dakota.

“When you inherit something that your parents bought for 100 dollars and it's worth 1000 dollars, you get it at the value of the date of death of 1000 dollars. They're going to eliminate that,” Kahler said. “When you get it, you get their basis of 100, meaning when you sell it, you have to pay tax on 900. This is going to hit the middle class. This is a tax increase for anybody who receives something from an estate.”

The Senate's tax bill also repeals the Affordable Care Act's individual mandate which penalizes people that don't have health insurance.

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